AS 57: Forth Quarter Strategies Selling on Amazon – I am the real Santa Clause

It’s been a crazy ride so far, and it’s just the beginning. Christmas, Black Friday, Halloween, Cyber Monday, Hanukkah, Thanksgiving, New Years they’re all coming. War is here.

But in all honesty, think about it. As a kid we grew up wondering how Santa Clause delivered gifts to everyone’s chimney on Christmas Day. How he had his elves working non-stop over at the North Pole. In reality, it’s businesses preparing as soon as January, maybe May, for the big 4th quarter that is coming.

For the non-american’s listening to this podcast, you probably think us Americans are absolutely crazy, with our 6+ holidays sequenced in a row, not including birthdays, and seasonal changes. Some sellers absolutely just focus on Halloween, the one holiday that most sellers don’t target, and some sellers hit extremes and target it with thousands of variations of costumes, masks, fake blood, you name it, they sell it.

My fourth quarter preparation began in May. I started doing projections based on a previous years numbers, which wasn’t all too much data. My brand’s journey started in August, and I was going into a quarter with 1 SKU at the time. This time around there’s about 18 SKU’s.

My order was placed in early July, in order to beat the orders of some competition, but ultimately just ensure that I be able to fil all potential demand. July, August, and most of September has passed by and the order is nearing it’s completion. It feels all to last minute honestly, BUT I am glad I put in the order that early.

Shipping wise, since I ordered such a significant amount of inventory, I am having my first go at Ocean freight. In fact, I’m doing a double swing at it. I’ve calculated the current velocity at which I’m selling at, and for now I’ve doubled that number for each SKU, and I’m sending that amount of units by air.

As for the rest of the units, which equates to about half of my total shipment, I am sending that by ocean.

Numbers wise, air freight is very expensive. It will cost me 3-5x more via air than ocean freight. And I give my ocean freight an allowable 12 weeks to travel across the ocean, arrive at a local warehouse, and then forward into Amazon.

The golden nugget here is I’ve noticed that I’m in a transition phase. I need some units via air to support the demand. I spend more to go by air because if I run out of stock, I’ll lose a lot in marketing, ppc, and BSR.

But in part of the transition, I’m starting to send via ocean. A longer term game, which requires a significant amount of capital to perfect. Roughly speaking it only costs 3000 dollars to go from China to Amazon with a 20 foot container. This includes all the costs that pertain to ocean freight: you have origin manifest charges, fuel charges for delivery and pickup, chassis, pickup and delivery, handling, pier pass, import customs clearance, insurance. Because it’s FOB, freight on board, the cost to get from the manufacturer to the ocean docks, is covered by the manufacturer.

Whew. Okay. So 3000 dollars. The significant amount of capital is what I like to call working goods. Let’s say your ocean freight shipment is $40,000 dollars. That $40,000 now sits for 12 weeks in this transfer phase. And then you have another $40,000 in manufacturing. And lastly, you have another $40,000 in actual inventory, inside of Amazon, or a fulfillment center. This is all to keep the vicious cycle of staying in stock work well. This is why the physical product business is so expensive to be in. For just 1 SKU, to be fully in stock, sell at a fast volume, and be supplied properly, end to finish, can cost a 120,000. And this just an example, of a complete logistics chain for 1 product.

Eventually, I want to have every shipment be via the ocean shipping. There is massive cost savings to be done here,